ICASA’s trial by fire

• This column was first published in ITWeb Brainstorm, a South African business technology magazine, on 1 June 2007. Click here to subscribe and read it with a free photo of me reading a collection of Punch cartoons.

Remember when Telkom asked the regulator whether IP was a basic service, and when it replied nine months later, Telkom took it to court for not having jurisdiction in the matter? Well, here’s the sequel.

Telkom has thrown down the gauntlet to the regulator. Like any dominant incumbent with a legal department the size of the North Korean Army, it knows this game well. The regulator must respond to its proposed interconnection rates for other operators and value-added network providers. How it responds will show whether it is as impotent as its predecessor, or can regulate decisively in the public interest.

Years ago, Telkom brought a case to the South African Telecommunications Regulatory Authority (SATRA), a well-intended but resource-starved body that would later be folded into Ivy’s Communications Authority of South Africa (ICASA).

The question was whether or not internet protocol (IP) was a basic service. If not, ISPs had something to sell. But if so, only Telkom could offer internet service, and ISPs would be designing websites to eke out a living.

Telkom knew what it was asking was absurd. But it also knew it would take SATRA months to tell it to get stuffed. And then it could take the matter to court, cynically challenging the jurisdiction of the very regulator it asked for a ruling in the first place. Meanwhile, Telkom built its own ISP, allegedly using cross-subsidisation and industrial espionage to win.

Technically, the case has not been resolved to this day. Though the law eventually made a ruling superfluous, Telkom had dealt a cynical but crushing blow to the internet revolutionaries.

And now for round two. Now that voice over internet protocol (VOIP) is finally legal, ISPs have been building infrastructure and obtaining number allocations so they can add voice revenue to their traditional data business. Problem is, they need interconnection prices from Telkom before any significant services can be launched. After months of delay, Telkom dropped the bombshell.

It proposed to charge Neotel and ISPs rates that would vary depending on who the victim is, and make their costs higher than Telkom’s own retail tariffs.
The intent is clear: it will cost more to obtain voice services from Telkom’s competitors as long as a large number of businesses continue to use Telkom fixed line services.

Telkom doesn’t have to do its competitors any favours, of course. But it does have to get the proposed rates approved by ICASA, which isn’t keen to oblige.

According to Lisa Thornton, an attorney specialising in telecoms law, Telkom is required to “negotiate cost-based interconnection”, and if it fails to do so – which it clearly has done – the regulator must reject the tariffs.

The risk is miring the process in months or years of legal wrangling, leaving ISPs (and Neotel) unable to offer any services that require interconnection with Telkom. If ICASA fights the rates, it will have to prove that it has the power and smarts to make a decision that not only sticks, but avoids the delays that neutered SATRA.

Alternatively, ICASA could make a big stink but approve the rates. That way, new services can be rolled out without further delay. Customers would soon discover that calls between Telkom and other operators are very expensive. At first, other operators might cop the blame for not delivering on the VOIP hype. But anyone can read prices, and when calls among other operators prove far cheaper, the penny should drop. Especially if ICASA publicly explains who is abusing its monopoly legacy for anti-competitive profiteering.

ICASA might also be able to approve interim rates, pending legal action to bring them in line with regulations and competition law. Prompt approval of these sleazeball rates will put market pressure on Telkom. It could also convince businesses of the benefits if everyone moved their voice business away from Telkom. At the very least, voice will no longer be the sole province of Poison Ivy’s foul cartel, so we’ll finally get some real price competition in the market.

As internet pioneer Lucio de Re pointed out recently, you can only show how bad things are in SA by providing a better service. “Only a revolution of the same nature as the early internet, in the hands of selfish technologists, is likely to change the situation, just as it did then.”

So this is ICASA’s trial by fire. If it fights Telkom and loses, it condemns itself to suffer SATRA’s ignominious fate. It must either win and win quickly, or get out of the way and let Telkom’s victims fight this revolution.